PUC to Begin Process of Implementing Alternative Ratemaking Legislation Following Approval by Governor & General Assembly
Published on 6/29/2018
HARRISBURG – Following approval by the General Assembly and the Governor’s signature, the Pennsylvania Public Utility Commission (PUC) will now begin the process of implementing Act 58 of 2018 (House Bill 1782), which provides for alternative ratemaking for natural gas distribution, electric distribution and water/wastewater companies.
Act 58 allows public utilities to petition the PUC to consider various alternative ratemaking mechanisms as part of utilities’ base rate proceedings, including: decoupling mechanisms, performance-based rates, formula rates or multiyear rate plans, or a combination of those alternatives. The Commission will now carefully evaluate how to best implement these changes to the Public Utility Code, while continuing the PUC’s underlying mission to ensure safe and reliable utility service at just and reasonable rates.
All interested parties should be aware that the alternative ratemaking mechanisms authorized under Act 58 must be proposed within the confines of a utility base rate case under Chapter 13 of the Public Utility Code. The Commission has a well-established process for reviewing base rate cases, which provides for hearings concerning the lawfulness and appropriateness of proposed rates, including proposed alternative rate mechanisms. Interested parties may respond to a utility’s application for alternative ratemaking by filing a complaint or intervening in a base rate case and addressing an alternative ratemaking proposal, including proposing and justifying any customer protections they consider appropriate.
Act 58 does not change this Commission process. The PUC’s current process for ratemaking is detailed in a recently-released “Guide to Utility Ratemaking,” which addresses many innovations that have made Pennsylvania a national leader in the field and contains a thorough guide to the procedures used by the Commission to set rates.
The Commission also has a concurrent process in place to codify the necessary framework and consumer protections of alternative rate mechanisms in any future base rate proceeding, including soliciting public comment on a proposed policy statement, policies that support the continued efficient use of all energy resources; targeted investment in distribution infrastructure to address the evolution of a distributed energy environment; and the encouragement of least-cost solutions. With the enactment of Act 58, the Commission is evaluating how to coordinate this alternative ratemaking policy statement process with implementation of the statute.
The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.
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